Good News: Disability Tax Form Finally Updated

Evelyn Jacks & Walter Harder

CRA has finally released the updated Disability Tax Form for the 2021 tax filing year which ended April 30 for individuals and June 15 for proprietors. Medical practitioners who complete Part B of form T2201 Disability Tax Credit Certificate using the digital application process will find that it is now updated to reflect the expanded eligibility criteria for mental functions and life-sustaining therapies, particular interest to diabetics and their caregivers. Here’s what you need to know:

Diabetics:  Those with Type 1 diabetes automatically meet the eligibility criteria and medical practitioners no longer have to provide the details of therapy for the 2021 and future tax years.  However, they must meet all of the 4 criteria, as do others taking life sustaining therapies:

1. Therapy is required to support a vital function and may include dialysis, insulin, oxygen or other therapies or chest physiotherapy
2. Therapy is needed at least 2 times a week for 2021 and future years and at least 3 times a week for 2020 and previous years.
3. Therapy is needed on average at least 14 hours per week (there is an extensive list of what is and is not included both before and after 2021 in the new rules)
4. Impairment is expected to last for a continuous period of 12 months starting in the tax year.

Mental function impairments.  In this case, the impairments again must be expected to last for a continuous period of 12 months and be present all or at least 90% of the time.  The sufferer must be unable to perform mental functions for daily life or those functions must take three times longer than someone of a similar age, even with appropriate therapy, medicine and devices).  It will be interesting to see what CRA will deem to be appropriate back up for the “three times longer” criteria.

The type of afflictions that are listed to qualify, starting in 2021, include:

• Adaptive functioning
  • Adapting to change, expressing basic needs, going into the community
  • Initiating common simple transactions
  • Carrying out basic hygiene or self-care activities
  • Performing necessary everyday tasks
• Attention
  • Showing awareness of danger and risks to personal safety
  • Demonstrating basic impulse control
• Concentration
  • Being able to focus on a simple task for any length of time
  • Understanding and recalling information (short term)
• Goal setting
  • Making and carrying out simple plans
  • Initiating everyday tasks
• Judgment
  • Choosing clothing appropriate for the weather
  • Making decisions about your own treatment and welfare
  • Recognizing risks of being taken advantage of by others
  • Understanding consequences of your actions or decisions
• Memory
  • Remembering basic personal information (such as date of birth and address)
  • Remembering things that are important and of interest
  • Remembering simple instructions
• Perception of reality
  • Showing an accurate understanding of reality
  • Separating reality from delusions and hallucinations
• Problem-solving
  • Identifying everyday problems
  • Carrying out solutions to simple problems
• Regulating behaviour and emotions
  • Behaving appropriately for the situation
  • Showing appropriate emotional responses for the situation
  • Controlling mood to prevent risk of harm to self or others
• Verbal and non-verbal comprehension
  • Understanding and responding to non-verbal information or cues
  • Understanding and responding to verbal information

Advisors and their clients who are living with these types of disability should initiate the process of completing this form to claim their refunds for the 2021 tax filing year.   More detail about the Disability Tax Credit will be discussed at the Virtual  CE Summit on September 21.